Income Tax Appellate Tribunal - Ahmedabad
Dcit, Central Circle-1(2),, Ahmedabad vs M/S. Angel Infra,, Ahmedabad on 6 March, 2020
1 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, AHMEDABAD BEFORE HON'BLE SHRI MAHAVIR PRASAD, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T(SS). A. No.94/AHD/2018 ( नधा रण वष / Assessment Year: 2011-12) D.C.I.T Central Circle-1(2) M/s. Angel Infra Room No.305, 3 r d Floor बनाम/ Survey No.261 Aaykar Bhavan Vs. Near Khodiyar Hotel, Bhadaj Ashram Road, Ahmedabad. Daskroi, Ahmedabad थायीले खासं . /जीआइआरसं . /PAN/GIR No. AASFA-1996-K (अपीलाथ /Appellant) : ( यथ / Respondent) Assessee by : Shri Ketan Shah- Ld. AR Revenue by : Shri O. P. Sharma-Ld. CIT-DR सन ु वाई क तार ख/ : 03/03/2020 Date of Hearing घोषणा क तार ख / : 06/03/2020 Date of Pronouncement आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeal by revenue for Assessment Year [in short referred to as 'AY'] 2011-12 contest the order of Ld. Commissioner of Income- Tax (Appeals)-11, Ahmedabad [in short referred to as 'CIT(A)'], Appeal No. CIT(A)-11/C.C.1(2)/Abd/521-A/2016-17 dated 17/01/2018 on following grounds: -
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.1,96,25,000/- made in hands of assessee without appreciating that entries of cheque on seized digital document matched with books of assessee, the name of project was written in another seized 2 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 documents, i.e., MOU whose contents matched with digital seized document & hence it cannot be termed as dumb documents.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO.
3. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent.
As evident, the sole subject matter of appeal is addition of Rs.196.25 Lacs.
2. We have carefully heard the arguments advanced by both representatives. We have also perused relevant material on record including documents placed in the paper-book. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.
3.1 Briefly stated the assessee being resident firm stated to be engaged in building construction was subjected to an assessment u/s 143(3) r.w.s. 153C on 21/12/2016 wherein the assessee was, inter-alia, saddled with an addition on account of unexplained cash receipt u/s 69A for Rs.196.25 Lacs.
3.2 Pursuant to a search action by the department on 04/12/2014 at the premise of Shri Asit Haribhai Vora and Shri Sanket J. Shah, an alleged accommodation entry provider group, the assessee was subjected to survey proceedings u/s 133A on the same day. The documents and digital data found during the course of search proceedings reflected certain cash payment made to the assessee. Consequently, notice u/s 153C was issued to the assessee for AYs 2011-12 to 2014-15. Certain material was seized / impounded from 3 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 assessee's premises during survey proceedings which was inventorized / tabulated as Annexure-A, item nos. 1 to 9. The details of the same has been placed on page no. 66 of the paper-book, which we have already perused. The material included loose papers, voucher book, digital data in the form of mirror image of computer hard disk etc. The assessee, in its submissions dated 06/12/2016 to Ld. AO, explained the contents of the loose papers / voucher files which were inventorized as per Annexure-A, Item Nos. 1 to 8.
3.3 During search operations, one loose paper no. 23 found and seized from the residence of Shri Asit Haribhai Vora and Shri Sanket Vora indicated certain cash payment to the assessee against sale of 9 flats. As per copy of Memorandum of understanding (MOU) seized during search operations, it transpired that the assessee entered into agreement for sale of 9 flats at Wind Chimes to a firm namely M/s Raj Shah Enterprises Pvt. Ltd. (REPL). The recorded cost of Rs.44.59 Crores correlated with the amount mentioned in the MOU. In one of computer file namely total amount.xls, date-wise payment was recorded. In the said sheet, some of the transactions cash was recorded against payment and dates. After analysis, if transpired the cash of Rs.196.25 Lacs was paid against the flats situated at Wind Chimes. As per the terms of MOU, REPL agreed to make payment of Rs.858.76 Lacs against allotment of 9 flats. The relevant documents /details seized from the resident of Shri Haribhai Vora and Shri Sanket J. Shah was verified with the details found from assessee's premises during the course of survey. After perusal of loose page no. 23 found during search 4 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 proceedings, it was noted that REPL made Cheque payment of Rs.90 Lacs on 29/10/2010 and another payment of Rs.196.25 Lacs in cash. The cash transaction was not reflected in assessee's books which led Ld.AO to show-cause the assessee to explain the same.
3.4 The assessee, in defense, vide submissions dated 13/12/2016, pleaded that the payment of Rs.1,96,250/- as written in the loose paper was allegedly read as 196.25 Lacs on mere assumption without ascertaining the same from the author of the sheet. No opportunity of cross-verification was provided to the assessee. This was further fortified by the fact that the proposed agreement was canceled subsequently and the cheque payment of Rs.90 Lacs was already returned to the party concerned. An affidavit of the partner supporting the same was also filed.
3.5 However, not convinced, Ld.AO rejected the submissions in view of the fact that actual amount received was reduced by last two digits of the entire amount and therefore, cheque payment of Rs.90 Lacs as accepted by the assessee was written as Rs.90,000/-. In Similar manner, the cash transaction written as Rs.1,96,250/- would represent amount of Rs.196.25 Lacs. Finally, alleged cash component of Rs.196.25 Lacs was added to the income of the assessee as unaccounted money u/s 69A.
4.1 Before Ld. CIT(A), the assessee argued that the loose paper was not found at assessee's premises. The same was neither signed nor in the handwriting of any partner of the firm and therefore, the same was merely a dumb document which could not be relied upon to make 5 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 additions in the hands of the assessee. Reliance was placed on various judicial pronouncements to support the same. The assessee also denied the contents of MOU since the same was not signed by all the parties and none of the partners of the assessee signed it. It was again reiterated that booking of flats were cancelled and amount was already refunded to REPL in July, 2012 well before the date of search. It was also submitted that no incriminating document was found during survey operation upon the assessee and the contents of each and every document was explained.
4.2 After due consideration, concurring with assessee's submissions, Ld.CIT(A) deleted impugned additions by observing as under: -
4.2.2 The assessment order and the submissions of the appellant along with case laws cited upon have been carefully considered. Ongoing through the facts mentioned in the assessment order and the seized documents, there is no dispute about the loose papers, which have been relied upon for making the additions were not found at the premises of the appellant but these were found at the premises of Shri Asit H Vora & Shri Sanket J Shah. These papers are not in the handwritings of any partner or employee of the appellant firm. These papers are not signed by anyone, and not by any partner or any employee of the appellant firm. In such situation, this document can only be held as dumb document as far as the appellant is concerned. The Hon'ble High Court of Delhi in the case of CIT v/s. Kulram Rai (2007) 75 CCH 0149 (Delhi HO held that if the assessee has not signed the documents, additions on the basis of such documents cannot be made. Further, statements to explain the contents of these papers were not recorded either during the search, during post-search enquiries or during assessment proceedings. No question was asked to the persons from whose residence, these papers were seized. In such circumstances, additions made on the basis of such evidences which were not confronted to anyone at any stage of investigation cannot be held justified.
The Hon'ble High Court of Delhi held in the case of CIT v/s. S.M. Agrawal (2007)293 ITR 0043 that the only person competent to give evidence on the truthfulness of the contents of the document is the writer. Keeping in view the judgements of the Hon'ble High Court of Delhi, the documents found during the course of search at third party are not reliable evidences in this case. The AO made the additions, as one entry of Rs.90 lakh paid by cheques tallied with the books of accounts of the appellant, whereas, another three entries on same page through 6 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 cheques did not match with the appellant's books of accounts. Thus, it is reasonable to believe that all the entries written on these pages do not belong to the appellant. The seized documents should be read as a whole to find out the correct nature of transaction and reading the seized material selectively is not permissible. Therefore, additions made by the AO on this ground also not found justified. The AO made the additions stating that Shri Ajay Patel has signed MOU with FGPL, REPL & Smt. Gira Shah. But the appellant's contention that Shri Ajay Patel is neither partner nor employee/authorized person by the appellant to sign any such document. These facts have been found factually correct. Shri Ajay Patel is not partner of the appellant firm, as verified from the partnership deed. This MOU has not signed by Smt. Gira Shah, therefore, it is not an admissible evidence, as unsigned document is not binding and cannot be enforced by law. Hence, the additions made by the AO for this reason are also not held justified. Name of the "Wind Chimes" project is nowhere mentioned in the papers found. Name of the appellant's any partners or appellant is also not mentioned on these pages. Still, linking of these pages to the appellant cannot be considered justified. Further, as alleged booking of 9 flats by the REPL, the appellant contended that 3 flats have been sold to other persons and sale deeds have been filed, which are placed on records. First installment for 2 flats were received by the appellant before the date of search. This is evident from the bank account of the appellant and entries in the bank account cannot be back dated. Six flats are still unsold and reflected as closing stock in the books of accounts by REPL. In such circumstances, considering receipt of Rs.1,96,25,000/- by the appellant from REPL in cash is not reasonable and justified. Keeping in view the discussion above, the additions made by the AO are not found sustainable factually and legally. Hence, the additions of Rs.1,96,25,000/- are deleted. This ground of appeal is allowed.
Aggrieved as aforesaid, revenue is under appeal before us.
5. Upon due consideration of factual matrix as enumerated hereinabove, we find that Ld. CIT(A) has clinched the issue in correct perspective. The only basis of making impugned addition was loose paper found at the premises of the third party. However, no corresponding incriminating material was found from assessee's premises which would corroborate the same. In fact, each and every document impounded from assessee's premises was explained during the course of assessment proceedings and no infirmity could be found in the same. We are of the opinion that it was incumbent upon Ld. AO to 7 IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12 make further inquiries in the matter to substantiate the veracity of the loose paper and bring on record cogent material / evidences to establish that cash was received by the assessee. In the absence of any such incriminating material/ evidences, no such addition could be made in the hands of the assessee. It is also evident that booking of flats against which the cash was alleged to be received by the assessee was already cancelled much before the date of search and cheque amount was already refunded by assessee to other party which would further weaken the stand of Ld.AO. Therefore, no fault could be found with the approach of Ld. first appellate authority.
6. Our view find support from the decision of Hon'ble Gujarat High Court rendered in CIT V/s Maulikkumar K.Shah (307 ITR 137) wherein Hon'ble Court refused to admit revenue's appeal, inter-alia by noting that Ld. AO had not brought any corroborative material on record to prove that on-money was received. The onus was on revenue to prove with corroborative evidence that the entries in the seized dairy actually represented the sales made by the assessee. Mere entries in the seized material was not sufficient to prove that the assessee has indulged in such a transaction. The inference of Ld.AO that the assessee received on-money was merely based on suspicion and surmises and there was no material whatsoever to support the conclusion of Ld. AO that the assessee had in fact received any on-money. Therefore, the additions based on mere presumptions and assumptions and without any corroborative evidence could not be sustained.
8IT(SS)A No.94/AHD/2018 M/s. Angel Infra Assessment Year :2011-12
7. Hence, the appeal stands dismissed.
Order pronounced in the open court on 06/03/2020 Sd/- Sd/-
(Mahavir Prasad) (Manoj Kumar Aggarwal)
Judicial Member Accountant Member
Ahmedabad, dated: 06/03/2020
SS, PS TRUE COPY
आदे शक त ल पअ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआय0 ु त(अपील) / The CIT(A)
4. आयकरआय0 ु त/ CIT- concerned
5. 1वभागीय 4त4न5ध, आयकरअपील यअ5धकरण, मंब ु ई/ DR, ITAT, Ahmedabad
6. गाड:फाईल / Guard File आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकरअपील#यअ$धकरण, मंब ु ई / ITAT, Ahmedabad.